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Structural Transformation, Adaptability and City Economic Evolutions An ESRC-Funded Research Project under the ESRC Urban Transformations Initiative

WORKING PAPER 8

Case Study Report

GLASGOW

Andy Pike Centre for Urban and Regional Development Studies, Newcastle University, UK

November 2017

Acknowledgments: The research for this working paper was undertaken as part of a project funded by the ESRC (ES/N006135/1) into Structural Transformation, Adaptability and City Economic Evolutions, as part of its Urban Transformations Programme. We are grateful to the ESRC for its support. The full team on the project includes Ron Martin (University of Cambridge), Pete Tyler (University of Cambridge), David Bailey (Aston Business School, UK), Peter Sunley (University of Southampton), Ben Gardiner (University of Cambridge and Cambridge Econometrics), and Emil Evenhuis (University of Cambridge). Thanks are due to the respondents for the interviews, participants in the roundtable in Glasgow in March 2017, Emil Evenhuis and the rest of the research team, Alasdair Rae for the SIMD map, and the project advisory group.

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1 Introduction

Since the early 1970s, Glasgow has been characterised by substantially below average GVA

growth and employment decline, lodged in a group of northern cities with similar

trajectories (Figure 1) (Tyler et al. 2017). Based on absolute and relative change in GVA and

employment compared to national (Great Britain) levels, Glasgow’s economic path can be

divided into three main episodes: Episode 1 (1971-1983) continued steep decline; Episode

2 (1984-2007) stabilisation and low/slow growth; and, Episode 3 (2008-2014) crisis and

weak recovery (Figure 2). Structural change, economic evolution and adaptation of the

Glasgow economy can be explained primarily by the socially and spatially uneven unfolding

of the processes of deindustrialisation and transition towards a service-based economy.

Figure 1: GVA and employment change, Glasgow, 1971-2015

Source: Cambridge Econometrics data constructed for the ESRC ‘Structural Transformation, Adaptability, and City Economic Evolutions’ project

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Figure 2: Major episodes of economic, institutional and policy change in Glasgow, 1971-2015


Over the same period from the early 1970s, the institutional arrangements have evolved

from local authority-led, broadly-based, multi-purpose, regional and sub-regional level, and

integrated co-ordination frameworks (Episode 1: Regionalism and Sub-regionalism, 1970-

1985)(Figure 2). A shift has occurred towards a system characterised by leadership and

partnership of the local authority with other public, quasi-public and private entities

focused upon specialised and narrower functional and more localised territorial (city and

intra-city scale) remits working within relatively more fragmented, streamlined and less

well-resourced structures (Episode 2: City localism, 1986-2009). Since 2010, a further

evolution towards a more (city-)regional (Glasgow and Clyde Valley), centralised and

national-Scottish orientation is evident (Episode 3: City-regionalism, 2010-). These shifts in

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institutional arrangements have been marked by ongoing churn and reorganisation and

shaped by the strategies and relations between Glasgow City Council and neighbouring

local authorities, the Scottish and UK governments, and the EU.

Since the early 1970s, the evolution of policies in Glasgow has undergone a broad shift

from a strategic, planned and redistributive statist model focused on the regional (West

Central Scotland) and sub-regional (Clydeside) levels with larger scale, broadly based,

longer term and hard/physical infrastructure interventions (Episode 1: Regionalism and

Sub-regionalism, 1970-1985)(Figure 2). The evolution has been towards a more ad hoc,

experimental and tactical market and business-oriented model at the city level (Glasgow)

with smaller scale, targeted (i.e. by geography, sector and/or enterprise type), shorter term

and soft/social infrastructure and supply-side initiatives (e.g. business support, innovation,

skills)(Episode 2: City localism, 1986-2009). Since 2010, a further evolution is unfolding with

the re-emergence of city-regional, medium scale, longer term and more hard/physical

infrastructure policies (Episode 3: City-regionalism, 2010-) (Figure 2).

For Glasgow, this case study outlines the context and its brief economic history. It then

describes and explains the comparative economic performance of the city in the national

context and the underlying processes of structural economic change. It then explains the

evolution of the city’s institutional arrangements and policies, and discusses their broad

effects upon its economic path, and finally draws some conclusions. This report draws

upon a comprehensive new data-set on the economic performance of all Travel To Work

Areas (TTWAs) in Britain with a population above 200,000 since 1971 (Martin et al. 2017).

The data analysis relates to the 2011 TTWA for Glasgow (Figure 3), and this functional

economic area does not exactly align with evolving local authority boundaries over the

period.

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Figure 3: Glasgow Travel to Work Area (TTWA) (2011 definition)

Source: Office for National Statistics (ONS)

The arguments are threefold. First, the extent, nature and rate of structural economic

change is integral to explaining city economic evolution and adaptation and the roles of

institutions and policies. For Glasgow, the large scale, rapid and sustained

deindustrialisation has configured (rather than simply determined in a clear, linear fashion)

policy formulation and institutional design in multiple ways. The size and depth of

economic change, the repeated and rapid shocks to the economy, and their chronic and

prolonged nature as well as their localised geographies have shaped how actors working at

different spatial levels have operated, organised their institutions and formulated policy

interventions of certain kinds. In their efforts to influence structural change and the

adaptation and re-orientation of the city economy, actors have constructed particular

diagnoses of the problems, developed policy and institutional responses of certain types,

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and shaped the conditions and future directions for the extent and nature of structural

economic change and adaptability in specific ways. Local actors have had a degree of

autonomy in policy formulation within the context of national UK and, following

devolution, especially Scottish government frameworks. The Glasgow experience suggests

the dimensions and trajectories of the unfolding paths of structural economic change in

cities play a discernible and causal role amongst other factors especially national economic

and regional policy in shaping and explaining (rather than simply determining) institutional

arrangements and policies.

Second, and relatedly, the extent and character of city economic change forms a context in

which public sector institutions and their policies acquire roles of particular kinds. For

Glasgow, the level and nature of economic change and the weakness and restructuring of

the private sector positioned the public sector as a principal actor and public policies as the

main interventions in attempts to influence economic evolution and adaptability. The form

of structural economic change and shifting composition of private actors situated public

sector institutions as central to the tasks of trying to encourage and promote its positive

dimensions (e.g. emergent new growth sectors) and ameliorate and mitigate its negative

aspects (e.g. large scale job loss). Acknowledging that the public sector has been the

“prime mover of much of the change” since 1945 in Glasgow (Lever and Mather 1986: 1),

this role has been evident through mainstream (e.g. education, health, housing) as well as

urban and regional economic and regeneration institutions and policies.

Last, institutions and policies exert discernible influences upon structural economic change,

evolution and adaptability in cities but the level, character and form of their influence is

variegated over time and space. Rather than being clear cut, definitive and contained, the

roles of institutions and policies are episodic and conjunctural: their influence and imprint

is more evident in certain times and spaces and under particular conditions. For Glasgow,

the scale, rapidity and prolonged nature of deindustrialisation was addressed by

institutions and policies in a strategy of promoting modernisation and attempting to hasten

in a managed and co-ordinated way the structural re-orientation of the city’s economy

towards new and growing economic activities. A strategy pursued in the context of a

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restructuring labour market, jobs gap, unemployment, deprivation and the national

dismantling of the redistribution and welfarism of spatial Keynesianism. What transpired

was more akin to a scramble to accelerate the transition towards a service-based city

economy due to the rapidity and scale of job losses hatched a distinctive economically,

socially and spatially uneven form of adaptation. Institutional and policy support sought to

accelerate and embed the positive impacts of wider trends in the Glasgow city economy

and fostered the emergence of a particular kind of focused service economy that shaped

the city’s subsequent development path and potential. City economic strategy was marked

by its shift to a city-centre focus and promotion, external economies of agglomeration

rationale, indigenous and exogenous (especially inward investment) approaches, and

selected sectoral emphasis (digital/tech, finance, property and culture). In common with

other British cities struggling with uneven post-industrial transition (see, for example,

Power 2016, Robinson 2002), Glasgow’s service economy is characterised by its social and

spatial labour market polarisation between higher-end knowledge intensive business

services and lower-end service jobs, hollowing-out and limited intermediate/mid-level jobs,

growth of the public sector and, beyond the focus upon some advanced manufacturing, the

relative neglect of the remaining industrial sectors in the city economy. The path of

structural economic change and adaptation in Glasgow has been shaped too by its position

within the wider city-region, Scottish, UK and international economy, and the interaction of

institutions and policies on economic development and housing in the context of

suburbanisation and its tight boundary within the wider functional economic area (Arnott

2006) (Figure 3).

2 Context and brief economic history

Glasgow was founded as a city in the 12th century. An initial key episode of Glasgow’s

growth occurred during the age of empire and colonial expansion in the 18th century which

stimulated the city’s transition from an ecclesiastical, academic and market centre into an

internationally-oriented commercial and trading hub (Lever and Mather 1986). The 18th

century end of slavery and the tobacco trade, loss of colonies and the technological

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advance of the age of steam power enabled Glasgow’s transition into a manufacturing

centre based upon local resources of coal and iron ore. Glasgow grew rapidly through

industrialisation and urbanisation, fuelled by large scale in-migration from the Highlands of

Scotland and Ireland (Lever and Mather 1986).

Glasgow’s second key episode of development was during the industrial era in the 19th

century as the “second city of Empire” (Fraser 2004: 1). ‘Carboniferous capitalism’ (Hudson

1989) fostered economic specialisation in heavy engineering, including rail locomotives and

shipbuilding, and underpinned an urban industrial growth complex founded upon skilled

labour, innovation, related and supporting industries and suppliers of ancillary goods and

services (Turok and Bailey 2004). Employment in the Strathclyde urban region with

Glasgow at its core expanded steadily and above national growth levels between 1876 and

1901 (Figure 4). By 1864, 20 shipyards operated on the Clyde, employing half the British

shipbuilding workforce by 1870 and producing half the tonnage of shipping (Fraser 2004).

These heavy industries supplied the UK market and developed export markets across the

world, especially within the British empire (Pacione 2009). Circular and cumulative

causation propelled Glasgow’s rapid economic growth trajectory as part of an expanding

industrial corridor in Clydeside, reaching from North Lanarkshire in the east to Inverclyde in

the west. During this period, Glasgow became “one of Britain’s pre-eminent industrial

cities” (Turok and Bailey 2004: 171).

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Figure 4: Cumulative deviations in employment growth by urban regions in the UK, 1851-1971

Source: Lee, C. H. (1979) British Regional Employment Statistics 1841-1971. Cambridge: Cambridge University Press.

The third key episode in the early part of the 20th century was more turbulent and volatile

for Glasgow’s industrial economy. In the early 1900s, economic prosperity faltered,

employment declined between 1901 and 1911 (Figure 4), and rapid population growth

transitioned into stagnation and net decline through out-migration (Pacione 2009). The

stimulus of armaments production for World War I between 1914-18 created “artificial

boom conditions” (Pacione 2009: 148) that generated renewed but temporary demand for

Glasgow’s heavy industries of locomotives and shipbuilding. Employment expanded and

reached its historical peak in 1921 (Figure 4). The inter-war years of 1918-1939 were

marked by a return to decline and employment contraction in the key industries of coal,

shipbuilding, pig-iron and steel production. Defence markets contracted and international

economic conditions deteriorated in the economic slump of the Great Depression during

the 1930s. Further and similarly temporary re-armament stimuli generated by defence

spending for World War II between 1939-1945 and the Korean conflict between 1950-53

rekindled growth in Glasgow’s heavy industries but proved short-lived (Young 2015).

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Attempts to develop high volume manufacturing, for example in automotives, were limited

and failed to last as the Rootes car assembly plant’s demise in 1981 in nearby Linwood,

Renfewshire, demonstrates.

The fourth key period post-war presaged an episode of renewed and more lasting

deindustrialisation. The iron, steel, heavy engineering and shipbuilding industries in

Glasgow fell into prolonged decline from the 1950s through to the early 1970s.

Employment fell sharply from the early 1940s and contracted faster than national levels

throughout the 1950s and 1960s (Figure 4). The causes of decline were multiple and inter-

related. First, specialisation in a relatively narrow base of economic activities and sectors

rendered Glasgow’s industries susceptible to swings and cycles, especially given many of

the markets were shaped by demand from the UK and other nation states and wider geo-

political circumstances. Second, the industries were focused upon making producer goods

for which markets were limited and stagnant rather than consumer goods for which there

were growing mass markets as international and domestic economic conditions improved

amidst the recovery of the post-war period. Third, many of the industries in Glasgow

operated in relatively closed and protected markets. Firms were insulated from longer-

term technological changes and pressures to innovate especially through the transition

from the steam age to the oil-based economy. This position rendered them vulnerable to

growing overseas competition in an internationalising economy marked by the rise of more

productive and innovative businesses in the US and Germany. As the new dimensions of

structural economic change unfolded, the industrial structure in Glasgow rapidly became

outdated. The adaptability of the city economy was hampered by distance from markets,

inadequate replacement of capital equipment and products, and aggravated by external

ownership and the lack of higher level and strategic functions and decision-making power

within both private companies and nationalised industries, mergers and acquisitions by

foreign-owned businesses, and undermined by the lack of investment in basic

infrastructure and premises, and obsolete skills (Slaven 1975, Checkland 1976, Pacione

2009, Young 2015).

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By the early 1970s, large scale, rapid and prolonged deindustrialisation had seriously

eroded the city’s economic base. Glasgow appeared to be a case of “arrested

development” with an ongoing struggle to formulate policies to deal with its “apparently

intractable socio-economic problems” (Cameron 1971: 315). Glasgow and Clydeside were

trapped in a situation of persistent economic decline marked by slow growth, reduced

employment opportunities, limited investment, mass redundancies, unemployment,

reduced incomes, negative local multipliers, and population flight (Hausner 1987). A high

proportion of Glasgow’s employment was concentrated in slow growing, stagnant or

declining industries with only a small proportion in growing sectors (Pacione 2009). Over a

quarter of total employment in 1961 or 142,000 jobs were lost in Glasgow City between

1961 and 1981 (Lever and Moore 1986a). One third of its population left over the same

period, around 25,000 every year, especially the young and relatively better educated

(Lever and Moore 1986a). This economic malaise meant “The City of Glasgow lay at the

heart of a high-cost low-productivity industrial region capable of achieving only limited

success in the global economy” (Pacione 2009: 149).

The economic history of Glasgow’s development path up to the early 1970s bequeathed

several legacies that have shaped the city economy’s structural change, evolution and

adaptation. First, the scale, rate and prolonged nature of deindustrialisation deeply

affected and conditioned the nature of economic change and strongly influenced the ability

of actors to organise appropriate institutions and formulate effective economic

development policies. The ramifications of the magnitude and pace of changes since 1945

are “not so much that they have altered the character of the city but that they have done

so with such speed” (Lever and Mather 1986a: 1). Second, the enduring dominance of the

specialisation in the city’s economy in a narrow range of heavy industries tilted its

economic structure towards a range of economic activities locked in a spiral of long-term

decline. This setting trapped its firms, labour pool, supply base and related institutions in

an economic base ravaged by deindustrialisation. Third, the dominance of large employers

in the heavy industries fostered an employee rather than employer culture that stymied

enterprising attitudes, behaviours and new business start-ups: the manifestation of

Checkland’s (1976) infamous Upas tree effect.

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Fourth, the absence of higher level, strategic and decision-making power, functions and

institutional capacity within both private companies and the then nationalised industries as

well as external ownership and control outside the Glasgow, Scottish and UK economies

inhibited adaptive capacity through limiting strategic change and hampering investment in

innovation and upgrading activities. Last, the geographically concentrated and localised

processes of cumulative decline have affected certain parts of Glasgow acutely – especially

the East End, south side and inner northern areas. This geography has made it difficult to

stabilise and reduce their rate of economic decline or stimulate recovery due to the closely

connected and mutually reinforcing problems of unemployment, inactivity, obsolete skills,

low levels of educational attainment, rising public service needs, and physical problems of

abandonment, blight, poor quality housing and inaccessibility (Pacione 2009, Turok and

Bailey 2004).

3 Comparative economic performance

In population terms, Glasgow has experienced prolonged population decline since the early

1970s in comparison with national levels (Figure 5). In absolute terms, this downward

trajectory bottomed-out in the mid-2000s and has undergone a modest upturn and growth

through the crisis to 2014. This growth has been weaker than other city-regions nationally,

comprising relatively low levels of natural growth and net international migration (ONS

2016). From 1.43m in 1971, in 2014 the city of Glasgow’s population returned to its level of

the early 1990s at just under 1.3m. In comparison with other British cities, Glasgow has

experienced amongst the highest levels of population decline since the early 1970s (Figure

5). Over the time period, Glasgow is at the bottom end of the range of TTWAs in Britain

alongside Birkenhead, Sunderland and Dundee with only Liverpool experiencing sharper

population decline.

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Figure 5: Cumulative differential growth of populations of case cities relative to GB average, 1971-2015


Glasgow exhibited slight GVA growth towards national levels in the early 1970s and early

1980s amidst a longer-run trajectory of decline, deepening during the mid-1970s and mid-

1980s (Figure 6). While short-lived peaks of convergence with national levels punctuate the

late 1980s, late 1990s, and mid-2000s, recovery has been demonstrated from the mid-

2010s from a low base. In absolute terms, the level of GVA has been flat during the 1970s

at under £20,000m, and grown consistently but slowly from the 1980s to nearly £30,000m

up until the fall around the 2008-09 crisis and the flattening out then increase in 2013 and

2014 (Figure 2). Compared to other British cities, Glasgow has the worst performance with

marked decline and divergence from national trends from the early 1970s, only punctuated

by some short upturns (Figure 6). Glasgow again resides at the bottom end of the range of

TTWAs in Britain alongside Dundee with only Wolverhampton and Liverpool experiencing

sharper declines in GVA over the same period.

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Figure 6: Cumulative differential growth of total GVA of selected case study cities compared to GB, 1971-2015


Glasgow experienced continued decline in employment from the early 1970s to the late

1980s in its national context, following the downward trajectory of the post-war period

(Lever and Mather 1986) (Figure 7). An episode of sharper decline occurred from the late

1970s and early 1980s, driven by the intensification of de-industrialisation and job loss,

followed by some short points of convergence towards national levels and stabilisation

from the late 1980s then a sharp decline after the 2008 crisis and flattening out in the

2010s. In absolute terms, a slow and sustained growth occurred from the early 1990s up

until the falls after the 2008-09 crisis followed by a period of stabilisation and slight upturn

in 2013 and 2014. By 2014, the city had yet to recover its levels of employment from 1980.

During the 1990s and 2000s, employment growth created particular kinds of job

opportunities ill-matched to the qualifications and skills of core city residents such as

“manual rich industrial sectors (manufacturing, transport, distribution and construction

jobs)” and better suited to higher qualified and skilled-labour from other parts of the city

and surrounding areas in “predominantly white-collar sectors” (business and financial

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services, public and other services) resulting in higher levels of in-commuting (Turok and

Bailey 2004: 171). The changing labour market and new job opportunities increased levels

of women’s labour market participation and employment while men suffered from the

contraction of industrial jobs (Turok and Bailey 2004). Employment opportunities capable

of retaining and growing the younger working age groups (25-44) were critical to enhancing

adaptability to changes in the city’s economic base (Arnott 2006). Glasgow sits at the

bottom end of the range of TTWAs in Britain alongside Merthyr Tydfil with only

Middlesbrough and Stockton, Dundee, Sunderland, Wolverhampton and Liverpool

experiencing sharper employment decline.

Figure 7 Cumulative differential growth of total employment in case study cities relative to GB, 1971-2015


GVA per capita in Glasgow was greater than the national level until falling below it in the

late 1970s where it has largely remained ever since, closing the gap for short periods in the

early and late 1980s and early 1990s and rising above national levels in the mid and late

1990s as well as the early, mid and late 2000s before the crisis (Figure 8). In absolute

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terms, Glasgow has broadly tracked the national trajectory at a slightly lower level since

falling beneath it in the late 1970s, although the dip and recovery are noticeably steeper

than in other cities following the crisis (Figure 9). Glasgow’s labour productivity kept pace

with many other British cities within a narrow range up until 1991 and stayed close but

below the national level during the period of divergence since 1991 (Figure 10) (Martin et

al. 2016). Again the particular nature of tertiarisation is key, especially the relative small

scale attraction and development of KIBS in Glasgow. Productivity increases are “no simple

panacea for ensuring city prosperity” (Turok and Bailey 2004: 154), however. The

relationship to city economic strategy, adaptation and employment is key, for example has

output per worker been enhanced by ‘low road’ strategies of job shedding or work

intensification rather than innovation and upgrading?

Figure 8: Development of GVA per Capita in Case Study Cities as a Percentage of GB, 1971-2015


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Figure 9: GVA per capita by selected city, 1971-2015


Figure 10: Labour productivity in selected cities, 1971-2015


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In summary, Glasgow’s overall economic performance since the 1970s is marked by three

periods of continued decline until the early 1980s, stabilisation and low/slow growth until

the crisis in 2008, and then further decline and weak recovery (Figure 2). In common with

other large formerly industrial cities in the UK such as Birmingham, Liverpool and

Newcastle, Glasgow has followed a path shaped by socially and spatially uneven de-

industrialisation and transition towards a service-based economy. Population and

employment have undergone decline and weak, prolonged recoveries. GVA has been in

long-term decline, punctuated only by some short-lived upturns. Productivity in the city has

been tracking the national level, albeit at a slightly lower level since the late 1970s.

4 Structural economic change

The structure of Glasgow’s economy has evolved since the early 1970s. Krugman indices

demonstrate that output specialisation in the TTWA was relatively similar to national levels

in the early 1970s and has become slightly more similar up to 2015 (Figure 11). However,

its economy became more specialised and dissimilar to the national structure in output

terms until 1983, after which its economic structure converged to become more like the

British picture through until the late 1990s. A further round of increased output

specialisation is evident from the late 1990s into the early 2000s before Glasgow

experienced further decreases and growing similarity with the national economic structure

through the rest of the decade. Output specialisation increased and then fell around the

crisis and recession. Employment structure in Glasgow was relatively similar to national

levels in the early 1970s and has become more similar up to 2015. It became more similar

from the late 1970s to the early 1990s. Some peaks of dissimilarity and relatively greater

specialisation are evident through the 1990s and 2000s. The change in economic structure

has been shaped by deindustrialisation and transition towards a service-based economy.

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Figure 11: Krugman Indices of Specialisation in Glasgow, 1971-2015


In the early 1970s, GVA in Glasgow was generated in a range of sectors in manufacturing

(metals and related, textiles and related, light and high tech manufacturing), private

services (transport and logistics, retail and personal services, knowledge intensive business

services), public services and construction (Figures 12 and 13). By 2014, given the

underlying structural change and de-industrialisation of the city’s economy, the

contributions to GVA had shifted. The largest growth was in knowledge intensive business

services alongside expansions in public services and retail and personal services, although

the KIBS growth was weaker than in some other British cities. Utilities provided a slightly

larger contribution while construction has broadly maintained its share. High tech and light

manufacturing have exhibited modest declines while the contributions of textiles and

related and metals and related have fallen.

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Figure 12: GVA by sector, Glasgow, 1971-2015


Figure 13: GVA by sector group, 1971-2015


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In the early 1970s, employment in the city economy was spread across a range of sectors

with notable proportions in manufacturing (metals and related, textiles and related, light

and high tech manufacturing), private services (transport and logistics, retail and personal

services, knowledge intensive business services), public services and construction (Figures

14 and 15). Glasgow experienced de-industrialisation and a prolonged employment shake-

out in manufacturing in the decades before the early 1970s. This meant manufacturing

remained an important but relatively smaller and shrinking part of the city economy

because the ‘tertiarisation’ and shift to a post-industrial service economy was already

underway by the early 1970s (see Figure 4). By 2014, the structure of employment in

Glasgow had changed with significant growth in knowledge intensive business services,

retail and personal services and public services, and modest growth in utilities. Transport

and logistics and construction experienced some limited decline. The largest declines in

employment were in high tech manufacturing, light manufacturing, textiles and related,

and metals and related sectors.

Since the early 1970s, the Glasgow economy has become more specialised in a range of

knowledge intensive business services, retail and personal services and public services –

each of which account for growing proportions of employment and GVA. While utilities,

construction and manufacturing are still important parts of the city economy they have

become relatively less important in employment and GVA terms than the growing service

sectors since the early 1970s. Manufacturing sectors have experienced sharper falls in

employment than output, reflecting productivity increases. Knowledge intensive business

services dominate contributions to output due to their higher productivity, while the more

labour intensive public and retail and personal services match them in terms of share of

employment. Over the period, the story is one of “the transition from Glasgow the

industrial city to Glasgow the service centre” (Pacione 2009: 149), albeit not as strong a

transition as that experienced in other British cities.

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Figure 14: Employment by sector, Glasgow, 1971-2014


Figure 15: Employment shares by sector group, Glasgow and GB, 1971-2015


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In terms of absolute and relative employment change by sector in manufacturing since

1971, the general picture is one of decline caused by deindustrialisation differentiated by

sector. Textiles was the largest sector and experienced the sharpest employment collapse

(Figures 16 and 17). Electrical equipment was a sizeable sector which experienced a

dramatic contraction too. Food and beverages and machinery and equipment manufacture

underwent more drawn out declines through the 1980s and 1990s, with food and

beverages stabilising and growing in the 2000s. Demonstrating its lumpy and large often

defence-related contract-based nature, shipbuilding and related employment continued a

sharp decline from the 1950s and 1960s into the early 1970s but then grew before further

dramatic collapse in the early 1980s, growth through to the early 1990s, and slower decline

into the 2000s – including a rally in the late 2000s.

Figure 16: Employment in selected manufacturing industries in Glasgow, 1971-2015


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Figure 17: Employment shares in selected manufacturing industries in Glasgow, 1971-2015


Amidst the general picture of employment growth in services underpinned by the shift

towards a service economy, sectoral pathways have exhibited some differentiation. Health

and residential care has demonstrated the largest growth displacing retail as the largest

employment service sector (Figure 18 and 19). Retail has undergone a fall and rise between

1971 and 2015, regaining early 1980s employment levels. Social work has grown steadily

over the period, more than doubling in size. Construction has experienced a significant

decline, marked by booms and slumps in employment especially through the 2000s. Public

administration rose the early 1970s, before a sharp fall, and then continued to grow until

the 2008 crisis and deep contraction. Warehousing and logistics fell through the 1970s into

the early 1980s but has since stabilised, despite a reduction around the crisis and recession

from 2008.

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Figure 18: Total employment by selected public and private service sectors, 1971-2015


Figure 19: Employment shares by selected public and private service sectors, 1971-2015


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In terms of the private services sector, the differential performance of key sectors is

apparent (Figures 19 and 20). Buildings services and landscape activities exhibit stand out

growth up to the peak of the crisis in 2008. Financial services were the largest employment

sector until the mid-1990s, experiencing strong growth to the mid-2000s, followed by a

sharp decline and limited recovery from 2011. ICT and computer programming was

relatively stable before a dramatic burst of growth in the late 1990s and early 2000s,

before declining through the 2000s and recovering since the crisis. Architectural and

engineering activities have remained significant, growing steadily through the 1980s, falling

in the early 1990s and then recovering through the 2000s. Auxiliary financial and insurance

services have grown from the late 1980s, going through several booms and busts from the

early 1990s. Head office activities and management consulting have followed a similar path

of steady growth, expanding from the late 1990s.

Figure 19: Total employment by selected private service sectors, 1971-2015


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Figure 20: Employment share by selected private service sectors, 1971-2015


Firm population dynamics in Glasgow show it has grown its stock of firms, albeit at a lower

level in comparison to the national GB expansion between 1997 and 2015 (Figure 21).

Glasgow has maintained its level of firm births over the same period, while nationally they

have declined. The level of firm deaths has remained constant in Glasgow compared to an

increase at the national level. Non-surviving births have fallen in Glasgow in the post-crisis

recovery in line with national experience. In sectoral terms, knowledge intensive business

services have grown amongst the stock of firms and firm births in Glasgow, mirroring the

national picture, while retail and personal services have declined in Glasgow and remained

broadly stable nationally. The sectoral spread of deaths amongst the existing stock of firms

in Glasgow has remained similar, with only a slight increase in knowledge intensive

business service firms in the city compared to a larger increase nationally. Non-surviving

births have mostly fallen in retail and personal services in Glasgow and nationally. In

Glasgow, the stock of firms with less than 10 employees has grown between 1997 and

2015, following the national trend but at a lower level (Figure 22). While larger firms with

more than 10 employees, have declined in Glasgow, again similar to the national trend.

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Firm births are relatively stable in Glasgow, with a slight decline in the larger category,

compared to a decline in the smaller category nationally. Firms deaths amongst the existing

stock are stable in Glasgow, while increasing for larger firms and decreasing for smaller

firms nationally. Non-surviving firm births have declined for larger firms in Glasgow and

nationally.

Figure 21: Firm population change by category and sector, Glasgow and GB, 1997-2015

Source: ESRC Enterprise Research Centre data constructed for the ESRC ‘Structural Transformation, Adaptability, and City Economic Evolutions’ project

Figure 22: Firm sizes change by category, Glasgow and GB, 1997-2015

Source: ESRC Enterprise Research Centre data constructed for the ESRC ‘Structural Transformation, Adaptability, and City Economic Evolutions’ project

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In terms of innovation, as measured by patents per million employees, Glasgow performs

weakly compared to the national picture across all patent types between 1995 and 2012

(Figure 23). Overall patent activity rose through to the early 2000s but has stabilised at a

lower level with more volatile performance year to year since 2003. The largest areas of

patents match the national level in physics and human necessities.

Figure 23: Patents per million employees by category, Glasgow and GB, 1995-2012

Source: Eurostat

Structural change in the Glasgow economy has reconfigured the occupational profile of the

TTWA, increasing the share of occupations at the top and bottom end of the skills

distribution. Between 1981 and 2015, in terms of the numbers of occupations,

professionals, associate professional and technical, administrative and secretarial, caring,

leisure and other service, sales and customer services, and elementary categories have

grown (Figure 24). In terms of the share of occupations, there has been a growth in

professional, administrative and secretarial, caring, leisure and other service, sales and

customer service, and elementary occupations in Glasgow (Figure 25). Declines are evident

in skilled trades and process, plant, and machine operatives over the same period.

Managers, directors and senior officials, and associate professional and technical have

been fairly stable. Compared to the national level, in 2015 Glasgow has a larger proportion

in professional, associate professional and technical, administrative and secretarial, and

sales and customer service occupations. Lower proportions than the national level are

29

evident in managers, directors and senior officials, and elementary occupations. By 2015,

the remaining occupations were broadly in line with the national structure.

Figure 24: Employment change by occupation, Glasgow, 1981-2015


30

Figure 25: Occupation change shares, Glasgow and GB, 1981-2015


Labour market polarisation, segmentation and hollowing-out have marked Glasgow’s

economic evolution and adaptive capacity with social and spatial inequalities. In-work

poverty, precarious employment and the concentration of employment opportunities in

higher skilled occupations often geographically concentrated in the central city area means

the “prospects of upward mobility for less qualified groups have become more restricted”

(Turok and Bailey 2004: 141). Entrenched and persistent deprivation is highly localised in

across the Glasgow travel to work area (Figure 26). Geographically concentrated decline

has left people and places cut off from city centre growth, despite being geographically

proximate, and created a legacy of entrenched and severe economic and social problems

including deprivation, poverty, worklessness (inactivity and unemployment) and poor

health (Pacione 2009, Webster et al. 2013).

31

Figure 26: Scottish Index of Multiple Deprivation, Glasgow, 2016

Source: SIMD by Alasdair Rae, University of Sheffield

The main processes explaining Glasgow’s economic evolution are several and closely inter-

related. First, large scale, rapid and prolonged deindustrialization generated by the collapse

of manufacturing has strongly shaped the economic structure of the city (Arnott 2006,

Turok and Bailey 2004, Pacione 2009). Importantly, many of the effects of

deindustrialisation impacted upon the city economy in the decades prior to the 1970s. The

manufacturing sector was already relatively smaller in employment and GVA terms before

the further rounds of deindustrialisation worked their way through in the late 1970s and

32

early 1980s. Large industrial employers in and around the Glasgow labour market were

rationalised, downsized and/or closed such as Beardmore & Co. (Parkhead) and Singer

(Clydebank): “diverse industries across Scotland, with life cycles as long as a century and as

short as a decade, all falling like ninepins by the end of the 1970s” (Young 2015: 9). The

manufacturing sector struggled to adapt through innovation and upgrading amidst wider

shifts in technologies, markets and industrial organisation. Lack of strategic decision-

making and R&D functions and external ownership beyond Glasgow and Scotland both in

private and nationalised industries inhibited adaptation efforts. The focus was mostly

limited to the renewal of activities within existing industrial specialisms rather than the

transformation and diversification into new and growing activities in related sectors

(Boschma and Iammarino 2009). The remaining manufacturing in Glasgow is relatively

advanced, specialised and productive – such as precision engineering by the Howden and

Weir Groups. But it is relatively small and with insufficiently strong growth prospects to

provide a major boost to employment, productivity and GVA growth in the city. Several

larger manufacturing employers have survived, including BAE Systems in Govan and

Scotstoun with naval warship specializations but these remain largely dependent upon UK

defence spending. Growth in the electronics industry in nearby settlements faltered as the

mainstays of Silicon Glen rationalised and closed, relocating to lower cost locations and

postponing investments (Young 2015). Brexit is generating profound uncertainties about

the UK and Scotland’s wider trading and labour market relationships.

Second, the post-war episode of globalization and the rise of western European, US and

then east Asian competition against which firms in Glasgow found it increasingly difficult to

compete have accelerated deindustrialisation (Pacione 2009). External demand amongst

businesses is dominated by regional (Scotland) and national (UK) markets rather than

European or other more international markets which is a “situation…symptomatic of a

more service-oriented economy and has changed since the heyday of manufacturing, when

exports of steel, ships and engineering products were very significant” (Turok and Bailey

2004: 155). Moreover, Glasgow lacks the critical mass of top-end, export-oriented KIBS.

33

Third, post-industrial transition and ‘tertiarisation’ have fostered the socially and spatially

uneven growth of a particular kind of service-dominated economy in the city. The service

economy is concentrated at specific points in the supply chain and certain markets, for

example retail and back office functions for financial services and utilities (Research Centre

Director, Author’s Interview, 2017). Glasgow city centre’s emergence as a regional service

centre has concentrated amenities (e.g. leisure, culture, retail and sports) and generated

particular levels and kinds of lower-end service jobs while city-regional, regional and

national (Scotland) service functions (e.g. FE, HE, hospitals, utilities and business services)

have created higher-end service sector jobs (Arnott 2006, Turok and Bailey 2004).

Increased levels of public expenditure during the UK New Labour governments in the 2000s

in particular supported the growth of employment and GVA. Public administration has

grown in particular relative to private services. In common with other British cities,

Glasgow’s economic evolution has been shaped by the growth of lower productivity

services and their predominance in the city’s economic structure (Martin et al. 2016). New

and growing sectors that could have assisted the adaptation of the Glasgow economy –

such as electronics sub-assembly, chemicals and some services – were either moving out or

establishing outside the city on industrial and commercial sites in adjacent local authority

areas and new commuting patterns were emerging amongst workers taking up jobs in

Glasgow city centre (Arnott 2006). A “fatalism” about the traditional industries was evident

and they were considered “doomed to die” rather than the objects of sectoral recovery

and survival strategies (Academic, Author’s Interview, 2017). Amidst the fire-fighting of

large scale closures in manufacturing, limited efforts were made to connect engineering

and manufacturing skills freed up in Glasgow and the west of Scotland with the emergence

and growth of oil and gas in the east of Scotland centred on Aberdeen from the late 1970s.

A strong element of Glasgow’s employment and GVA growth has been based upon

knowledge intensive business services, particularly the expansion of a specialisation in

financial services – with associated spinoffs for software, advertising and other business

services – and mobile phone and utility support call centres (Turok and Bailey 2004). The

growth and adaptation of financial services in Glasgow has been supported by favourable

conditions including: the history of financial services; distinct Scottish legal and financial

34

systems; pool of skilled labour and entrepreneurs; urban transport infrastructure and

especially suburban rail network; sizeable workforce; telecommunications networks; and,

commercial property availability and effective intermediaries (Turok and Bailey 2004).

Stimulated by industry association Scottish Financial Enterprise seeking ‘borrowed size’ to

enable the sector to expand outside its traditional centre in Edinburgh and

telecommunications corporate BT looking to stimulate demand for broadband services,

Scottish Enterprise Glasgow and Glasgow City Council established a new International

Financial Services District at the Broomielaw in the early 2000s (Turok and Bailey 2004).

However, specialization in financial services – albeit with lower sunk costs and legacies in

terms of capital, labour and institutions than the previous industrial era in the city’s

economic base – still risks disruption. Multiple issues include innovation in automated

financial technologies (‘fintech’) and information and communication technologies,

consolidation uncertainty and geopolitical shifts in market access and relocations in the

wake of the UK EU referendum and ‘Brexit’ process, intensified competition from other

urban financial centres in the UK and beyond, and consolidation and changes in corporate

ownership and organization as well as state regulation following the global financial crisis

and economic downturn (Glasgow Chamber of Commerce, Glasgow Economic Leadership

and Glasgow City Council 2016).

Although contributing positively to much needed new job creation, concerns have emerged

about the quality of service sector employment. Issues are based on the low value-added

and low productivity nature of service activities and functions with limited managerial roles

or technical responsibilities with potential for upgrading and career progression and their

footloose and transient nature (Turok and Bailey 2004). Higher value-added and higher

productivity service activities have been sought by economic development institutions in

business services (accountancy, legal), software, high-technology, biotech, more

sophisticated call centres and creative industries including design, music and media such as

TV, newspapers and film (Turok and Bailey 2004). Recent policy efforts have focused upon

the digital and creative sectors building upon large anchor institutions such as BBC

Scotland, the flow of graduates in technical and creative subjects from Glasgow’s higher

education institutions, and ‘talent’ attraction from beyond Glasgow. Yet the potential

35

mismatches remain between the types of more advanced service activities and jobs that

are being generated and the entrenched and persistent problems of unemployment and

deprivation within social groups localised in parts of the city.

Fourth, the geographical centralisation of growing service activities in Glasgow’s urban core

and the suburbanisation of new manufacturing sectors and service activities and housing in

local authority areas outside the city has been proceeding since the 1980s (Lever and

Mather 1986). Glasgow’s position within the functional economic area has been reshaped,

stoked by emergent competition within the wider city-region and central belt from new

and expanded employment and housing developments in Braehead, East Kilbride, Glasgow

Fort, Cumbernauld and Ravenscraig from the 2000s.

Fifth, given the substantive role of public sector services in the city and its growth since the

early 1970s, the dismantling and reform of the redistribution and welfarism of the ‘spatial

Keynesianism’ (Martin and Sunley 1997) of the post-war period has been felt acutely in

Glasgow. The city remains over-represented relative to the national level in the public

sector including public administration, health and higher education shaped by growth for

demographic and political rather than economic reasons (Turok and Bailey 2004). The

substantial public sector left Glasgow vulnerable with the onset of post-2010 austerity and

constraints on public expenditure and investment, albeit relatively shielded to date by the

Scottish Government’s particular approach with less pronounced and slower reductions.

The key events and developments in the structural economic change, evolution and

adaptation of Glasgow are outlined in Figure 27 below.

36

Figure 27: Key events in Glasgow’s economic evolution since 1970

Source: Various sources especially Mooney and McGrail (2016)

37

From the early 1970s, Glasgow continued its economic decline until the low point of the

early to mid-1980s (Figure 2). The city has since experienced a slow and drawn out

economic revival disrupted by the shock of the global financial crisis and economic

downturn in 2008 followed by a weak recovery up to 2014. Over time, Glasgow’s economy

has experienced relatively weak employment recoveries and benefits from the cyclical

upturns in national economic conditions, raising questions about the national to city level

economic transmission mechanisms. Job generation during boom years is limited and

unable to transform the trajectory of sharp employment decline and the shrinking labour

market during slumps. This situation suggests employment growth is fragile and readily and

adversely affected by shocks and downturns. The city economy appears to have relatively

limited resilience and adaptive capacity (Audas and MacKay 2010).

5 Development of institutional arrangements

The evolution of the institutional arrangements for economic development in Glasgow can

be divided into three broad episodes (Figure 28), each broadly matching and lagging the

main periods of economic change. Episode 1 is characterised by regionalism and sub-

regionalism from the early 1970s to the mid-1980s. The institutional arrangements were

mainly local authority-led, broadly-based, multi-purpose, regional and sub-regional and

based upon integrated co-ordination frameworks. Economic development institutions and

their working practices were shaped by Scotland’s corporatist administrative ethos, culture

and history (Local Authority Official, Author’s Interview, 2017). Key institutions during this

period were Strathclyde and Glasgow local authorities, Scottish Development Agency

(SDA), the Scottish Office, and the European Commission. Strathclyde Regional Council, in

particular, was key given its size, specialist functions and staff, and leading role in Scotland

and wider European regionalism. Its focus upon the wider functional economic area

surrounding Glasgow was pioneering at the time. Confronting the scale, pace and

prolonged nature of de-industrialisation in the city of Glasgow, the Clydeside sub-region

and Strathclyde region, the institutions sought to develop comprehensive development

strategies and policy interventions in an attempt to co-ordinate and manage structural

38

economic change and support economic transition to the service-based economy. The

scale and nature of economic change meant public sector leadership, co-ordination and

integration was critical in “seeking to synthesize public and private resources and notions

of public intervention and market forces…based on the belief that centralized statist or

fragmented market strategies are inappropriate to the complex problems facing Clydeside.

A multi-faceted approach is required if the transition is to be handled successfully” (Moore

and Booth 1986: 64).

39

Figure 28: Economic governance institutions in Glasgow and Scotland, 1970-2014*

* Grey indicates entities (controlled) at national level, green at the Scottish level, blue at a (city-)region level, and red at a local level.

Source: Various including Scottish Government (2008)

40

Local authorities led initially and then worked in concert with the Scottish Development

Agency. The Glasgow Eastern Area Renewal (GEAR) initiative pioneered the model of multi-

agency partnership working involving Strathclyde Regional Council, Glasgow District

Council, SDA, Scottish Special Housing Association, Housing Corporation, Greater Glasgow

Health Board and other agencies.

Created by the Labour government to head-off nationalist sentiment after the first Scottish

independence referendum in the early 1970s, the SDA was established in the mid-1970s.

The design of the SDA was informed by the West Central Scotland Plan Team and the

European RDA model as a broadly-based institution with powers and resources across the

economic development realm. Incorporating many of the existing functions from older

institutions (e.g. Scottish Industrial Estates Commission)(Lever 1986), the SDA was

responsible for developing the lowland Scottish economy using financial assistance to

business, direct provision of industrial infrastructure and urban environmental

improvement with local authorities and sectoral strategies and industrial estates. SDA

became the lead economic development and policymaking organisation at the lowland

Scotland level and engaged in partnership working with local authorities (Halkier 2006). It

followed an interventionist model, for example it was central in a rescue package for Weir

Group in 1981 (Young 2015). A linked agency, Locate in Scotland, was established with a

Scotland-wide focus in 1983 to attract inward investment for the re-industrialisation of the

Scottish economy.

By the mid-1980s, the SDA had shifted its focus to the promotion of private industry and

away from its direct interventionist and ownership roles. SDA co-ordinated with the

Scottish Office as the conduit with UK government departments given the limited

devolution to Scotland at the time. EU regional policy played a role with its broad-based

regional partnerships and multi-year regional programmes focused on economic, social and

environmental objectives in supporting hard infrastructure investment, industrial site

reclamation and development (Danson et al. 1999). Greater private sector involvement and

institutionalisation began with Glasgow Action from the mid-1980s. Glasgow had suffered

from the lack of industrial leadership since the 1930s and had no cadre of strong and

41

innovative business leaders which hampered the adaptability of the city’s economy. This

situation was exacerbated by increased reliance upon overseas and mobile expertise and

investment through the new waves of FDI.

The regional and sub-regional focus of Episode 1 shaped the evolution of structural

economic change in Glasgow through attempting to situate the city within its wider

functional economic area and contain the suburbanisation of growth generated by

deindustrialisation, re-industrialisation and transition to a service-dominated economy.

Institutions were central to shaping the path of structural economic change in rejecting the

strategy of restructuring and modernizing the existing industries to facilitate new growth

due to perceptions of their limited growth potential and lack of investment capital. The

alternative strategy was pursued to “cut them down to scale to suit new markets and

replace lost production and employment with an infusion of new industries. This policy

framework effectively established the pattern for industrial development in Glasgow for

the remainder of the century” (Pacione 2009: 150).

Episode 2 is marked by a focus upon city-level localism between 1985-2009. The

institutional framework during this period was characterised by leadership and partnership

of the local authority with other public, quasi-public and private entities focused upon

specialised and narrower functional and localised territorial (city and intra-city level) remits

working within relatively more fragmented, streamlined and less well-resourced structures.

Scottish Enterprise was created in 1991 from the merger and integration of the SDA and

Scottish Training Agency with a lowland Scotland remit alongside a network of 12 private

sector-led Local Enterprise Companies (LECs). The shift in institutional arrangements was

from an accountable local authority-led to a localised and business-led quasi-autonomous

non-governmental organisation (quango). The focus moved too from an economic and

social regeneration to a business support approach emphasising enterprise and innovation

(Young 2015). The Glasgow Development Agency (GDA) was the LEC for the city with a

strategy to accelerate post-industrial transition via a city-centre focused emphasis upon

public-private partnership for property-led regeneration, place marketing, cultural

industries promotion, enterprise, innovation, business investment and training. GDA’s

42

strategy was informed by strategic analysis of the economic potential of the city-centre in

wider city-regional growth and the need to reposition the city and focus on new industries

and areas of growth in both tradeable and non-tradeable services (McKinsey and Company

1985). The private sector leadership of Glasgow Action was important too, underpinning

the partnership working. The adjacent LECs to Glasgow in Ayshire, Lanarkshire and

Renfrewshire were all focused on progressing economic development within their areas in

competition with Glasgow. This new institutional arrangement fragmented the functional

economic area and undermined strategic overview and joint working. With the abolition of

Strathclyde Regional Council in 1996, “multi-purpose metropolitan councils were removed

in favour of streamlined special purpose agencies and single tier authorities for smaller

areas” (Turok and Bailey 2004: 144). Fragmentation and lost skills, scale and overarching

powers resulted from SRC’s demise, although critics argued it was too large and diverse

and struggled effectively to match up its different tax and funding structures. The GDA was

focused on building confidence over time, improving the image of the city centre and

lowering risks for investors through supporting infrastructure investment in transport to

defer the onset of diseconomies of congestion, land, rent and wage inflation, poor

environmental quality, and constant competition from new commercial business parks in

the city suburbs and surrounding settlements (Turok and Bailey 2004).

From 1999, the creation of the Scottish Parliament and Executive with devolved powers

and resources brought a substantive new and accountable set of institutions into the frame

and a period of hiatus as it became established. The Scottish Government had a Scotland-

wide focus, economic development strategy and framework Smart Successful Scotland

(2004). It struggled to recognise the importance of addressing Glasgow’s role and issues in

the west of Scotland given the economic and demographic size of the city and its economic

problems in the national Scottish context (University Business Director, Author’s Interview,

2017). Following a cities review in 2003 and City Visions strategies, a city and increasingly

city-regional focus on ‘Greater Glasgow’ and its infrastructure as well as its relations

through the Central Belt with the Edinburgh city-region emerged. The Scottish Government

also supported Glasgow City Council’s housing stock transfer and debt write-off with the

creation of the Glasgow Housing Association (Turok and Bailey 2004). LECs were changed

43

into public bodies and subsidiaries of Scottish Enterprise by the Scottish Executive in 2000

to make them accountable and operate within the legislative framework of the Parliament

(Goodwin et al. 2002). Scottish Development International investment was created in 2001

from the merger of Scottish Trade International and Locate in Scotland. An economic

development review in 2007 led to abolition of the LECs and Local Enterprise Forums (LEFs)

and their replacement with 6 Enterprise Regions across Scotland, the centralisation of

functions and services within the Scottish Executive, and transfer of responsibility and

funding to local authorities through ‘single points of contact’ (e.g. for Business Gateway

and local regeneration services). The aim of the reforms was to better support the national

Scottish Government economic strategy and reduce bureaucracy and streamline local

delivery. In 2008, skills and training were integrated with the enterprise networks of

Scottish Enterprise with Careers Scotland, Scottish University for Industry and learndirect

Scotland to create Skills Development Scotland. In the wake of the crisis, the Glasgow

Economic Commission was established to inform a new economic strategy for the city with

an emphasis upon future wealth generation, investment, diversification and a more

strongly sectoral approach connecting with the voice of private sector-led Glasgow

Economic Leadership.

During the 2000s, the impact of institutions upon structural economic change was evident

in its city-centre and service economy focus but hampered by fragmentation, unclear links

between related functions, lack of strategic leadership and limited powers and resources

(Markusen 2012, Turok and Bailey 2004). Glasgow’s particular legacy of large scale and

rapid deindustrialisation left substantial holdings of derelict, vacant and contaminated land

challenging to redevelopment plans. Efforts to assemble land and create strategic industrial

sites in the late 1990s was limited by lack of resources and key public agencies being

focused on other priorities (Gibb 2002). Difficulties were generated too by pressure from

housing developers to rezone employment land for housing and incentives to reclassify

brownfield industrial sites to capture potential council tax revenue, government subsidies

and capital receipts from public land sell-offs (Turok and Bailey 2004).

44

The most recent and current Episode 3: City-regionalism, 2010-, is characterised by

institutional change at the city-regional (Glasgow and Clyde Valley) level alongside a

centralised and national-Scottish orientation. The Glasgow and Clyde Valley City Deal was

agreed between the constituent local authorities, UK and Scottish governments in 2014

and provided powers and resources focused upon infrastructure investments for economic

and employment growth (O’Brien and Pike 2016, Waite 2016). It reflects aspirations to

upscale governance arrangements for Glasgow city to mirror the emergent model of city-

regional governance from England with Combined Authorities (Markusen 2012). At the

outset of 2017, a further review of economic development institutions by the Scottish

Government is set to report and recommend further integration and streamlining. Given

their longer term and infrastructure focus within the wider city region, the most recent

institutional arrangements are a work in progress and yet to impact upon the trajectory of

structural economic change in the city. Concerns exist, however, about the lack of coherent

geographies, institutional responsibilities, and plan, and the proliferation of policy

initiatives and under-developed evaluation frameworks.

6 Development of policies

The evolution of policies for economic development in Glasgow broadly mirrors the three

main episodes of institutional arrangements (Figure 28). Acute economic, social and

environmental problems have meant Glasgow and the West Central Scotland conurbation

have been a “laboratory for experimental urban policy” (Lever and Mather 1985: 1). From

the early 1970s, there has been a widening of the types of policies deployed, with a

stronger emphasis upon enterprise and business support from the 1990s as well as science,

technology and innovation policies (Figure 29). In terms of changing emphases within the

policy mix, inward investment, training and skills, and events and place branding have

grown in importance across the three episodes. While employment support and sites,

premises and infrastructure have received relatively less emphasis in the more recent

episode.

45

Figure 29: Summary of types of policy initiatives, Glasgow, 1970-date

Source: Author’s research

In Episode 1: Regionalism and sub-regionalism, 1970-1985, the policies were strategic,

planned and redistributive with a geographical focus upon the regional (West Central

Scotland) and sub-regional (Clydeside) levels (Figure 28). The focus was on larger scale,

broadly based, longer-term and hard/physical infrastructure interventions focused on sites

and old industrial site remediation. The evolving policies were important in shaping the

structural economic evolution and adaptation of the city economy. Two closely linked

policies in the post-war period played a critical role: managed large scale population

relocation and industrial dispersal and decentralisation. With the more mobile, younger

and skilled population leaving the city in the midst of deindustrialisation, relocating those

left behind was seen as a priority to reduce congestion, overcrowding and enable clearance

and demolition of low quality housing stock and rebuilding (McCrone 1991). The large scale

of public housing in Glasgow meant addressing its deteriorating condition was a major

economic issue for the city (MacLennan 2000). In an “internal suburbanisation” (Academic,

Author’s Interview, 2017), peripheral housing estates were established at Castlemilk,

Drumchapel, Easterhouse and Pollock at the edges of the Glasgow city boundaries but with

limited economic and social infrastructure. Relocation of population was dovetailed with

46

the creation of new industrial sites to provide employment opportunities amongst

employers relocated from the city and attracted in from Scotland, the UK and beyond. The

new job opportunities were attractive to and taken up by the more skilled population

leaving Glasgow, leaving the less skilled population in the city stranded alongside its

shrinking economic base (University Business Director, Author’s Interview, 2017).

Policy priorities were the provision of ‘new look’ and modern amenities to enable the

attraction of inward investment and economic revitalization including from the wave of US

electronics multi-nationals Honeywell and IBM. Incentives included regional policy aid,

provision of serviced industrial sites and advance factories and basic infrastructure

including roads, environmental improvements and ‘key worker’ housing (Lever 1986). This

policy was underpinned by the Scottish Office’s then view of Glasgow as “an uncompetitive

economic location because of its congested infrastructure, unattractive image, unionised

workforce and unresponsive local authority” (Smith and Wannop 1985). This poor image of

Glasgow in environment and labour terms motivated later re-branding strategies and

policies but were underpinned by declining cost advantages in labour, linkages and

transport (Lever 1986). Despite opposition from the Glasgow Corporation, the New Towns

Programme was rolled-out with Scottish Office designated green belt and overspill policies

to create East Kilbride (1949), Cumbernauld (1956), Livingston (1962) and Irvine (1966)

each with their own development corporations. As an example of a strong, sustained and

relatively well resourced policy intervention, this decentralisation furthered the

momentum of Glasgow City’s decline (Slaven 1975, Lever and Moore 1986). The regional

focus and especially grant concentration amongst new and expanding firms hastened

deindustrialisation and the flight of manufacturing from the inner city to outer areas in

Glasgow during this period (Lever 1986). With a mean cost per job created or safeguarded

of £35,000 (nominal prices)(Department of Industry 1983), it was estimated that this

regional policy helped reduce the unemployment rate in Glasgow for men by 0.5% and

0.4% for women between 1971 and 1977 (Diamond and Spence 1983). This period also

included policy interventions focused on Glasgow and infrastructure funded under the

European regional policy.

47

In an important policy shift, the New Towns policy was halted in the early 1980s. This

change followed, first, the HM Government (1977) White Paper Policy for the Inner Cities

that changed the view of cities from economic liabilities to economic assets. This new

approach focused on improving the economic base of cities and regeneration rather than

physical demolition and suburban decentralisation. Second, the 1974 West Central

Scotland Plan was pivotal in rejecting decentralisation and dispersal and promoting

redirection of investment back into the inner city areas (Lever and Moore 1986b). Policies

began to shift from traditional regional policy incentives seeking to influence the location

of mobile manufacturing from elsewhere in the UK and internationally to more urban-

centred policies focused upon services, small firms and less formal enterprises (e.g.

community businesses, co-operatives), self-employment and comprehensive regeneration

(Lever 1986). SDA focused on new factory provision and refurbishment in priority areas

such as GEAR, Clydebank, Motherwell and the Maryhill corridor but struggled to let large

and older premises created in the 1950s such as Hillington, Thornlie Bank and Queenslie.

The flagship and innovative policy was Glasgow Eastern Area Renewal (GEAR) (Wannop

1990). GEAR was established amidst Scottish Office concerns about the existing local and

central government’s capacity effectively to tackle the major economic and social problems

in Glasgow and Glasgow District and Strathclyde Regional Council’s lobbying to reverse the

policies of inner city dispersal and new town creation detrimental to Glasgow’s inner core

(Moore and Booth 1986). GEAR linked economic and social objectives, creating jobs,

reducing unemployment and providing training opportunities (Donnison and Middleton

1987).

The overarching aim of development policy was to accelerate the transition towards “a

new post-industrial economy” with a key role for the public sector as “managers and co-

ordinators of transition” in the private sector given the scale, pace and persistence of

economic decline (Moore and Booth 1986a: 62). New approaches and policies augmented

rather than replaced the older policies given the extent and nature of Clydeside’s

“economic malaise” (Lever 1986: 44). A mix of ad hoc and experimental with strategic and

planned policies were evident (Lever and Moore 1986b). However, the post-war

suburbanization and growth of surrounding local authorities continued to shape Glasgow’s

48

development as an under-bounded administrative area within a city-regional context

growing in importance. Tensions were evident in fiscal policy as Glasgow City struggled to

maintain central urban amenities and services for increasing numbers of suburban

residents living beyond the city’s tax base and commuting from places including East

Dunbartonshire and East Renfrewshire. The economic geographies of this development

pattern and its supporting transport infrastructure tied suburban settlements into

Glasgow’s economic orbit within the wider city-region.

In Episode 2: City localism, 1985-2009, the policy approach shifted towards an

ad hoc, experimental and tactical market and business-oriented model with a more local

and city-centre (Glasgow) focus with smaller scale, targeted (i.e. by geography, sector

and/or enterprise type), shorter term and soft/social infrastructure and supply-side

initiatives (e.g. enterprise support, innovation, skills)(Lever and Moore 1986a, Moore and

Booth 1986b)(Figure 28). The “traditional equity-based regional policy was scaled back”

(Turok and Bailey 2004: 144) during the 1980s. Policy became more market-oriented and

based on supply-side interventions with reduced levels of central government expenditure.

The rationale and focus moved to fixing market failures, allocating public funds via

competition, strengthening urban economies for growth, job creation and competitiveness,

encouraging enterprise and entrepreneurship, public sector function attraction, and

supporting private investment, private sector-led institutions and initiatives (Hausner 1987,

Thornley 1991). Enterprise in particular was promoted with an emphasis upon increased

rates of new business start-ups and small firm growth for inner city revitalisation which, for

some, was “why Glasgow ended up not being Detroit” (Academic, Author’s Interview,

2017). Enterprise Zones were established, for example in areas hit by large scale industrial

closures such as Clydebank in adjacent West Dunbartonshire following the 1984 Singer

factory closure and loss of 3,000 jobs. Policies sought to provide public subsidies and

support for private business to overcome localised constraints including business support,

small firm promotion, environmental improvement, financial assistance schemes, training,

and provision of smaller scale industrial premises in urban cores (Lever 1986, Moore and

Booth 1986b).

49

The strategic focus on Glasgow city-centre aimed to create policies to support the wider

post-industrial transition and growth of existing and new activities in the service sector and

consumption-based services through supporting an urban core and associated external

economies of agglomeration (McKinsey and Company 1985). Diversity in the service sector

was sought – targeting financial services, IT, retail and tourism – to avoid the dependencies

and risks of specialisation that marked Glasgow’s heavy industrial history (University

Business Director, Author’s Interview, 2017). Policies focused on priority strands including

re-industrialisation via FDI, brownfield land redevelopment, urban innovation systems, and

spectacle events that acted as “pacing devices” (University Business Director, Author’s

Interview, 2017) and “anchor points for investment” (Academic, Author’s Interview,

2017)(Figure 29). Specific initiatives included provision of commercial premises and inward

investment focused on priority sectors in business and consumer services including call

centres and hospitality, leisure and tourism, and improvement of the built environment,

refurbishment of historic buildings and provision of new flagship infrastructure to support

business development (e.g. Scottish Exhibition and Conference Centre on the reclaimed

site of the former Queen’s Dock at Finnieston). Shifting from an approach where “the city

turned its back on the river” (Research Centre Director, Author’s Interview, 2017), key sites

along the Clyde River were targeted to focus development but this amounted to “strip

development” (Academic, Author’s Interview, 2017) and prefigured the later more

strategic and integrated approach.

City branding policy was a key element in an attempt to shed the poor image of Glasgow as

a tough industrial town that had lost its role and was in terminal decline scarred by

unemployment, drugs, gangs and violence – summarised in the ‘no mean city’ reputation

(McArthur and Kingsley-Long 1957). Inspired by the ‘I Love New York’ campaign in the

1970s (Greenberg 2008), the strategy focused on improving and promoting a new and

modernised image based on the ‘Glasgow’s Miles Better’ slogan and underpinned by

tangible investment and improvement in the built environment and fabric of the city,

especially its centre (Pacione 1995). The entrepreneurialism of city actors in the public and

private sectors was promoted and their organizational capability, ‘can do’ attitude,

effective partnership, energy, imagination and appropriate modern infrastructure (Turok

50

and Bailey 2004). Policy cohered around the ‘Glasgow’s Miles Better’ campaign during

1983-1990 and its attempt to change negative perceptions from the history of ‘Red

Clydeside’ and its attributes of collectivism, organised and militant labour, and poor

industrial relations that were perceived as damaging to economic transition and

investment (Checkland 1976). Strategy and policies sought to construct a new ‘post-

industrial’ image and brand for the city based upon the service economy of cultural

activities, private consumption and tourism (Turok and Bailey 2004). Events and

investments included the Glasgow Garden Festival 1988 built upon reclaimed Princes Dock

closed in the 1970s, 1990 European City of Culture, 1999 City of Architecture and Design,

2002 UEFA Champions League Final, 2003 World Bowl XI, Rotary International Convention,

and 2014 Commonwealth Games (Pacione 2009). Policies have more recently sought to

counter earlier 1980s criticism of elitism, misplaced priorities, short-termism, and

ephemeral initiatives (Turok and Bailey 2004). More policy attention has been focused

upon the wider economic and social benefits and enduring legacies, emphasizing the

upturn in economic fortunes for the city and changing built environment.

From the late 1990s and into the 2000s, national Labour government and Scottish

government policy connected and aligned, shaped by a new Scottish focus informed by

successive national economic development strategies and policy frameworks. Priorities

moved towards broadly-based approaches including economic, social and environmental

dimensions, governance with multi-agency public-private partnership institutions,

increased use of private investment, and emphasis upon partnership and community

engagement (Pacione 2009). The early 2000s city policies of the Scottish Government

introduced the beginnings of city-regional thinking to address longer-term infrastructure

planning focused upon key city-regional and cross-boundary projects nationally significant

for the Scottish economy. These included the long-term Clyde Corridor plan (including the

Digital Media Quarter, International Financial Services District, Glasgow Harbour and

Renfrew Riverside) and the upgrading of infrastructure including M74 extension, East End

Regeneration Route and 2014 Commonwealth Games (Pacione 2009).

51

Attempting to catch the wave of changes towards services in the economic structure, city-

centre focused policies were extended and deepened during the 2000s with the promotion

of the knowledge economy and business and financial services. The emphasis upon the

International Financial Services District at Atlantic Quay sought to attract financial services

firms and complementary residential and hotel developments (Pacione 2009). More

recently, policies have targeted the creative and digital sectors. The large scale Pacific Quay

project – the former Princes Dock and site of the 1980s Glasgow Garden Festival – is the

site for the new headquarters for the BBC, Scottish television company STV, production

facilities for Scottish Screen, the Science Centre, Imax cinema, and commercial office and

public leisure facilities (Pacione 2009). Further initiatives are linking into the city-centre

‘innovation district’ developments of Glasgow and Strathclyde Universities with policies

aimed at exploiting and embedding their roles as anchor institutions supporting R&D,

innovation, commercialisation and skilled labour production and graduate retention.

Addressing the net export of especially science graduates from the city is a key and

challenging issue given the limited scale of potential re-absorption in the engineering and

manufacturing base despite its evolution and connection with ‘servitisation’ and ‘manu-

services’ and the growth of the high-level functions of energy utilities in the city (Academic

and Local Authority Official, Authors’ Interviews, 2017). However, the increased numbers

of graduates in Glasgow’s looser labour market has led to some displacement of less

qualified workers. This has occurred because of the relatively limited number of

conventional graduate jobs available and the take-up by graduates of the middle and lower

level jobs created by the shift towards a service-based economy in the Glasgow economy in

sectors including catering, call centres, lower level administration, retail and related

occupations (Turok and Bailey 2004).

In Episode 3: City-regionalism, c.2010-, the policy approach has evolved towards the

(re)emergence of the city-regional scale, the medium and longer term and new

hard/physical infrastructure initiatives (Figure 29). Policies in this most recent period have

yet to impact upon structural economic change but important directions are emergent.

First, the central-city focused strategy and policy has been consolidated. Initially, through

the remediation and connection of sites adjacent to the city centre, for example the

52

Enterprise Area and ‘Creative Clyde’ project at Pacific Quay and the maturing and

expansion of the infrastructure to compete for large scale international conferences,

conventions and concerts at the Scottish Events Campus. Policies have been underpinned

by a strategy of positioning Glasgow as the urban centre situated within and providing

complementary roles and functions in the wider city-region of the Clyde Valley. This has

been formalised within the Glasgow and Clyde Valley City Deal in 2014 and its policy focus

upon economic growth, employment creation and infrastructure investment as well as the

Scottish Governments funding of infrastructure to better connect Glasgow to its

surrounding areas and open-up potential development sites in the East End and inner

South Side. The central-city focused revitalisation in Glasgow has continued to raise issues

about its relationships and roles in the broader city-region especially with the industrial

towns in Inverclyde, Ayrshire, West Dumbartonshire and North Lanarkshire given their

weaker economic potential, smaller size, lack of larger city/metropolitan assets, and

struggle to attract attention and investment (Turok and Bailey 2004). Second, given the

emphasis in urban economic growth thinking on scale, critical mass and connectivity, the

conception of the functional economic area of the Central Belt linking Glasgow and

Edinburgh has raised the potential for renewed co-operation on employment, housing and

transport policies building upon the informal links around tourism, airport issues and

cultural projects.

7 Policy outcomes and impacts

Assessing the outcomes and impacts of policies and institutions for the evolution of the city

economy over five decades requires a broad and meso-level approach to discern the main

elements of change and continuity, and construct plausible accounts of the roles of certain

episodes of institutional arrangements and policy types. This approach contrasts narrower ,

micro-level and quantitative evaluations of specific policy initiatives over shorter time

periods. Addressing the main domains in the analytical framework for the case studies

(Evenhuis et al. 2017), the broad outcomes and impacts of institutions and policies can be

outlined. First, in terms of the evolving economic base of the city, the large scale, rapid and

53

prolonged de-industrialisation has configured the institutional and policy responses

especially central role of the public sector. National UK policies of liberalisation accelerated

deindustrialization in the late 1970s and early 1980s. Under the weight of responding to

the industrial crisis and mass job loss, local policy did not prioritise recovery and/or re-

orientation of the manufacturing base due to problems of historic dependency on too few

specialized sectors and perceived limited future prospects. Policy was unable meaningfully

to challenge the limited embeddedness and sustainability of inward investment in

manufacturing as an economic diversification path. Local policy was more successful in

accelerating and focusing transition to a more diversified service-based economy through

inward investment and indigenous development especially in more knowledge-based

business services. The service-focused local policies supported growth of public and other

private services especially in the city centre. Initial struggles to change entrenched internal

and external perceptions of the city’s economy and potential have made some headway

through sustained policy efforts since the early days of the 1980s ‘Glasgow’s Miles Better’.

Recent progress has been made through the – somewhat belated in comparison with other

cities in the UK and internationally – policy and institutional focus upon science, technology

and innovation policies and HE linkages to support innovation, upgrading and future

growth paths via anchor institutions (BBC, HE, health and social care). Overall, the local

policies appear to have supported the structural evolution of the Glasgow economy,

especially when aligned with national policies, for example in halting the further extension

of the New Towns programme that was proving detrimental to the city’s economic

adaptation during the 1980s. However, overall they appear to have had relatively little or

at best sporadic and episodic influence on upon the level, nature and direction of change.

Second, labour market and skills policies have been relatively small scale, limited and

reactive responses to the magnitude, pace and prolonged deindustrialization and uneven

transition to the service-based economy. This has left and, arguably, entrenched a legacy of

localised unemployment and inactivity amongst certain social groups in specific parts of the

inner city and outer estates. Connecting with national policies, local policies have made

some progress in supporting the uneven adaptation of the city labour market to the

service-based economy focused on specific sectors, functions and markets such as retail,

54

back offices and customer support. Local policies appear weaker in being able to stimulate

the growth of higher skills demand from employers to match the labour supply, especially

from the city’s universities which has resulted in the net export of especially science

graduates. Extensive and planned public investments in education and further training have

not been matched by private investments.

Last, there is clear evidence of institutional and policy impact in city centre transformation

through sustained built environment and public realm investments, especially since the

1980s. Upgrading the infrastructure is work in progress and, notwithstanding the recent

City Deal, is struggling with funding and financing challenges. Localised improvements via

regeneration and housing development are ongoing. Success is evident and supported by

the increasing emphasis on infrastructure for private and business tourism linked to HE and

cultural/leisure amenities in Glasgow and beyond. Work is in motion on the more

integrated and co-ordinated approaches to large-scale Clyde-oriented strategic

development plans in Glasgow, the wider city-region and Central Belt linking to Edinburgh.

8 Conclusions

This case study of Glasgow has provided the context and brief economic history, outlined

its comparative economic performance, described and explained the processes of

structural economic change, mapped out the evolution of institutions and policies, and

sought to understand their roles and influence upon economic change. Central to the

analysis is that structural change, economic evolution and adaptation of the Glasgow city

economy is explained by the socially and spatially uneven unfolding of the processes

deindustrialisation and transition towards a service-based economy. Constitutive and

causal relations between institutions and policy and structural economic evolution and

adaptability in cities are difficult to determine and isolate their relative extent, nature,

directions and strength. This is because the relations and processes involved are multi-

faceted, direct and indirect, interactive and circular. Narrower evaluation approaches

would highlight the lack of quantitative, robust and systematic data and perennial issues of

55

the counter-factual, additionality, deadweight and displacement. No automatic, direct or

simple relationship is evident or claimed between institutions and policy and economic

evolution. Notwithstanding these constraints, three arguments are made in analysing the

Glasgow case with wider ramifications for thinking about and explaining the role of

institutions and policy in structural economic change and adaptability at the city level.

First, the extent, nature and rate of (structural) economic change is integral to explaining

city economic evolution and adaptation and the roles of institutions and policies. The large

scale, rapid and sustained deindustrialisation in Glasgow has configured (rather than simply

determined in a clear, linear fashion) policy formulation and institutional design in multiple

ways. These have included the formulation of multi-faceted development strategies and

policies with particular objectives and the design of institutional arrangements with specific

and integrated remits both sectorally and geographically. With the structural shift towards

a service-based economy, the institutional and policy focus upon supporting transition to a

service-led and city-centre focused development based upon attracting and supporting

growth sectors was critical to Glasgow’s adaptation. The particular kind of service-economy

established with its dual structure of high and low end services has shaped the further

evolution of the city economy. The reliance upon the public sector suggests that a

combination of the city’s rebuilt form, infrastructure and legacy have filtered the kinds of

services growing in the city. Other British cities have arguably had a more upgraded

transition towards more higher value-added activities, whether or not this has been

assisted by institutions and policies. Economic evolution, then, appears to have a

generative and formative role in shaping how institutions and policies emerge and develop.

The sheer weight of economic change has made formulating policies and institutional

arrangements and assembling resources to confront the scale of the task challenging and

difficult. Across episodes of change in Glasgow, actors have sought to be adaptable and

catch-up in diagnosing the scale and nature of the problems, attempting to ameliorate

them, and trying to shape emergent and establishing directions of change. In the longer-

run particular kinds of resilience and adaptation to structural change are evident in

Glasgow from the end of slavery and tobacco trade and bank failures of the 1870s

56

(Markusen 2012), but the modern record demonstrates weakness in adaptability and

periods of vulnerability.

Second, the level and nature of structural economic change in cities creates circumstances

in which public sector institutions and their policies acquire roles of particular kinds. The

weakness and plight of the private sector and scale of economic change in Glasgow

situated the public sector as the lead actor and public policies as the key interventions in

trying to shape economic evolution and adaptation. In conditions of weakness in the

economy and private sector, the impact of public institutions and policy are key and

marked by their co-operation and joint partnership working given the range and scale of

issues to be addressed. The turn to services and the city-centre based strategy rather than

attempts to revitalise the failing manufacturing sector was a key strategic turning point,

shaped by the large scale, entrenched decline and limited growth prospects of the

traditional industries. The public sector institutions were hampered in their roles and

responses to economic change through the UK’s centralised system of government and

governance (including centralisation at the Scottish level), the historical and ongoing

change, churn and disruption in institutions and policies and their periodic lack of

alignment in strategic, policy and geographical terms. Private sector influence grew from

the 1980s in line with the growing private services sector in the city economy, with its

persistent calls for the relaxation of planning controls and more rapid decision-making

(Turok and Bailey 2004), and partnership working has become central to the institutions

and policies developed.

Last, the level, character and form of the influence of institutions and policies upon

structural economic change and adaptability is variegated over time and space. The

experience of Glasgow since the early 1970s demonstrates the episodic nature of the

influence and imprint of institutions and policies at certain points and under particular

conditions, shaping evolution in certain directions including the attempt to hasten and

manage the transition to a city-centre and service-based economy. Given its relatively

smaller scale and specialised focus, territorial development policy sits within and is

influenced by the wider forces of national economic conditions, macroeconomic policy and

57

the larger spend of mainstream public policy (e.g. education, health). Regional and urban

policy is interpreted as “most likely to succeed when it is least required, and least likely to

succeed when it is most needed” (Lever and Moore 1986b: 142-43). The nature of this

relationship suggests institutions and policies have most purchase upon shaping city

economic evolution when working with the grain and direction of economic change to

steer economic pathways once established, underway and in motion. This is evident in the

acceptance and acceleration of deindustrialisation and transition towards a service-based

city economy from the 1970s. There is less evidence in the Glasgow case that institutions

and policy can be readily generative and able to stimulate emergent and new economic

paths that would not otherwise arise in the city. Institutions and policies have more

influence in conditions where there is commitment and support to provide capacities,

capabilities and resources able meaningfully to shape economic change. Over the three

episodes of institutional and policy change in Glasgow – regionalism and sub-regionalism

(1970-1985), city localism (1986-2009) and City-regionalism (2010-) – that influence looks

to have diminished and lessened in relation to fostering the emergence of new and

sizeable economic strengths with growth potential.

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